Projections adjusted upwards for 2020 housing market, slowdown still expected in 2021

Press release -

House prices will continue to rise this year, with the number of homes sold expected to remain stable. With mortgage rates remaining low and financial support giving a boost, ABN AMRO’s Group Economics has adjusted its earlier forecast upwards in its latest Housing Market Monitor. At the same time, the deteriorating situation on the labour market and the end of financial support packages are expected to cause the housing market to slow down in 2021 and beyond.

The most recent housing market data for this year remain as positive as ever. Transaction numbers continue to rise, and the 8.2% price increase in August was in fact the highest rate for the past eighteen months. With mortgage rates recently having gone down, incomes going up and announcements of a series of tax measures and other arrangements to support the housing market, ABN AMRO’s Group Economics has adjusted it projections upwards.

Senior Housing Market Economist Philip Bokeloh of ABN AMRO’s Group Economics explains, “Over the past few months, the government’s financial support packages have kept businesses afloat and saved jobs. As the government gradually phases out its financial support, starting 1 October, unemployment will rise more rapidly. Already, a number of large companies have announced reorganisations. Naturally, the negative impact will carry over to the disposable income of consumers, and consequently to the housing market.”

Although the slowdown on the housing market is not happening as swiftly as previously expected, ABN AMRO is still predicting a downturn in the longer term. “It will start with a decline in the number of homes bought, followed by increasing pressure on house prices,” Bokeloh continues. ABN AMRO’s Group Economics initially expected transactions to drop by 5% in 2020. “For 2020, we now expect the numbers to stabilise. For next year, we stand by our prediction of a 10% drop.” ABN AMRO expects price levels to rise by 7¼% this year (previously 6%) and to stabilise next year (previously -2%).

The Housing Market Monitor offers more than just analyses of prices and transactions. To read the full analysis ‘Housing market: projections up, outlook less positive’ (in Dutch only)


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